The European Commission approved an Italian rescue of Alitalia and said the airline's new owners would not have to repay an illegal government loan, clearing a major hurdle in the deal to revive the carrier.
The Italian government-backed CAI investor group's €375 million ($473.4 million) takeover of Alitalia's profitable assets is contingent on the bailout winning EU approval.
The Commission determined a €300 million loan to the airline in April was illegal state aid, but the EU transport commissioner said the obligation to repay it would rest with Alitalia's assets languishing under bankruptcy rather than CAI.
"The debts have to be paid back by the old Alitalia," EU Transport Commissioner Antonio Tajani, a former aide to Italian Prime Minister Silvio Berlusconi, told a news conference.
"The loan has to be paid back by Alitalia, by the airline itself."
CAI was keen to avoid having to repay the loan, and Italy's government had sought to ensure CAI was protected by stating that any repayment obligation should be tied to those Alitalia assets not being acquired by the investor group.
Alitalia filed for bankruptcy in August after years of being weighed down by high labour costs, frequent strikes, high oil prices, mismanagement and political interference.
With no other bidders, the CAI group of about three dozen Italian entrepreneurs struck a deal to cherry-pick Alitalia's best assets, while the Italian state assumed the rest, including a large chunk of its debt and troubled units.
The Commission said Alitalia's assets must be sold at market price in order to ensure its creditors get their money back.
CAI's takeover offer is subject to approval by Alitalia's bankruptcy commissioner - who has appointed independent advisers to estimate the value of the airline's assets.
Reuters